Bankruptcy law is considered to be an essential practicing area in the legal field. Therefore, the US law firms are expanding their bankruptcy and restructuring practices. Filing bankruptcy is common in the US as the economy is undergoing depression. Millions of people in America are filing bankruptcy when they are unable to grapple with their financial issues. People file under personal bankruptcy that incorporates chapter 7 and chapter 13. If you are undergoing financial distress then filing for bankruptcy will help you give a fresh start. Before you file bankruptcy ensure that you have complete information on bankruptcy law.
What are the types of bankruptcy law?
The Bankruptcy Act of 1994 signed by former US President Mr. Bill Clinton, helped to implement the law. This law contains comprehensive provisions for business as well as personal bankruptcies. It provides easy solution to both consumers and businesses with faster hearings. It encourages them to file under chapter 13 bankruptcy as it can restructure the debt and help them start a fresh with ease. They can avoid severely affecting their credit report by filing under chapter 13 bankruptcy. The National Bankruptcy Commission is set up to monitor as well as probe into bankruptcy laws and practices, enabling a fair opportunity to litigate.
What are the salient features of Bankruptcy law?
A comprehensive bankruptcy reform plan is represented by the National Bankruptcy Commission in 1997, November. The plan is revised as well as reviewed before implementing in 2005. According to the old law, when debtors file under chapter 7 bankruptcy and have no assets to liquidate; in this situation the creditors might not get anything. In such circumstances, people are compelled to file under chapter 13 bankruptcy according to the new law. It encourages the debtors to repay debt under a new schedule and help to start a fresh.
What is the effect of bankruptcy law?
According to the 2005 bankruptcy reform plan, the court will intervene in order to determine whether a debtor is eligible to file bankruptcy. The debtors planning to file bankruptcy are required to undergo means test. In this situation, the debtor’s income will be compared to your state’s median income. You might be allowed to file under chapter 7 bankruptcy only if you’re unable to afford to pay twenty five percent of your unsecured debt and your income fails to exceed the median income of the state. According to the new law, if you are found manipulating with the bankruptcy laws to avoid paying your debt then the court can compel you to file under chapter 13 bankruptcy.
